How can UK Government seize the opportunity to transform the way it procures technology?

The creation of a unified Digital Centre for Government creates an opportunity for the UK to optimise its~£20bn technology expenditure. Read our thoughts on the key commercial challenges it faces and the potential solutions it could implement as the UK embarks on this journey of transformation.  

A clear and consistent approach to contracting 

As the technology market shifts towards global products and platforms, it has been acknowledged that Government’s procurement and supplier management processes have not adapted to reflect the shifts in the technology market¹. It may no longer be possible to agree the bespoke, complex contracts that have been seen historically, and there will need to be support from the centre to departments in creating new model service arrangements, along with training on how to balance risk and competitive leverage with vendors who will have limited appetite to amend standardised offerings. 

Critical to the success of this initiative will be the steps taken to educate the non-commercial functions and professions (digital, policy, project delivery etc) who have an influence upon contracting outcomes, but whose standard operating procedures (SOPs) may not have been updated to reflect changes in the technology market. For example, we have recently supported a major government department to execute a complex procurement process that will enable the movement of their on-premise ERP system to a modern, SaaS-based platform. This required a concerted effort to support departmental information security teams to understand both the trade-offs and benefits of a SaaS model, and heavily tailoring the model services contract to match the reality of the SaaS service model.  

A ‘shift-left’ on contract management 

The urgent demands of policy priorities mean that the focus for Government Commercial professionals on executing complex deals at pace is understandable. However, often the critical tasks of managing the contract in life are under-prioritised and the metrics for tracking outcomes are poorly defined². Teams designing and executing deals are not incentivised to stay into delivery, leading to significant issues in delivery and value leakage, with contract management too often the poor relation when it comes to talent and budget. Government must accelerate the use of ‘shift-left’ principles, when mobilising contract and supplier management teams, onboarding these resources at a stage that enables them to shape the strategy and deal execution process based on their experience and lessons learnt; as well as identifying ways to incentivise deal teams to stay in-post following deal execution.  

To do this effectively, post-contract management capabilities should be considered as part of the overall procurement strategy, factored into the funding considerations at OBC stage and implemented prior to deal execution. At Baringa, we have developed an Intelligent Client Function framework which supports clients to understand the size and shape of the contract management capabilities which will be required to effectively manage their technology contracts, based on lessons learnt from similar agreements across central government. 

Re-defining value for money 

The current emphasis on minimising vendor lock-in, increasing competitive tension and SME participation must be better balanced against the cost and risk of moving and/or disaggregating business critical capabilities across multiple providers. The value for money equation and associated procurement and technology policies must take better account of the realities of the new digital products and services landscape, and offer balance between business continuity and ease-of-use, set against traditional notions of VFM. 

To do this, the centre should provide updated guidance to departments which places an increased emphasis on meeting business needs and rebalances the value-for-money equation accordingly. This would supplement existing guidance, which is of a more general nature, and could benefit from greater input on the more complex issues, as recognised by the NAO³. This guidance must be supported by tailored assurance processes, where digital procurements are not judged according by all of the same standards as other procurements and steps taken to minimise business disruption are viewed in a positive light. One method of doing this would be for the cost of business change to be used as a factor to influence investment and sourcing decisions.  

If you’d like to learn more about how Baringa can work with you to shape your technology procurement deals and enhance your contract management capabilities, then get in touch. 

References

1. https://www.gov.uk/government/publications/state-of-digital-government-review/state-of-digital-government-review#digital-supply-chain  
2. https://assets.publishing.service.gov.uk/media/67ceb0a4df9470296491605a/Performance_Review_of_Digital_Spend_-_for_publication_final_version.pdf 
3. Government’s approach to technology suppliers: addressing the challenges